Orion Energy Systems Q2 loss widens to $811K
OESX reported $47.434 million in first-half revenue, alongside $2.033 million used in operating activities.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Orion Energy Systems, Inc. (OESX) reported revenue of $21.691 million for the three months ended September 30, 2026, compared with $19.919 million a year earlier, while its net loss was $811,000 versus $581,000. For the first six months of fiscal 2027, revenue was $47.434 million versus $39.494 million, and net income was $1.149 million compared with a $1.825 million net loss.
Operating activities used $2.033 million of cash in the six-month period, compared with $1.304 million provided a year earlier; cash and cash equivalents were $3.736 million at September 30, 2026. Total long-term debt was $8.525 million at September 30, 2026, versus $5.972 million at March 31, 2026.
One customer accounted for 32.3% of quarterly revenue and 35.5% of six-month revenue; at September 30, 2026, one customer represented 32.0% of accounts receivable. An amendment effective May 29, 2026, extended the revolving credit facility’s maturity from June 30, 2027, to June 30, 2030. Remaining availability was $12.5 million, net of $5.0 million borrowed, against a borrowing base supporting approximately $17.5 million of availability.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointSix-month revenue rose to $47.434 million from $39.494 million.
- Moderate pointSix-month net income was $1.149 million, versus a $1.825 million loss.
Negative
- Moderate pointQuarterly net loss widened to $811,000 from $581,000.
- Moderate pointOperating activities used $2.033 million, versus $1.304 million provided.
Filing Explained
The shelf’s one-hundred-million-dollar ceiling is future-offer capacity, not securities sold through this filing.
This Form 10-Q reports that shareholders approved an amended incentive plan, increasing shares available for awards from 600,000 to 900,000 and extending the plan to
If additional common shares are issued under that pool, they would reduce existing holders’ percentage ownership absent offsetting changes.
The 10-Q also describes flexibility under its March 2026 shelf to offer and sell up to
Key Figures
Key Terms
performance obligation financial
sales-type lease financial
borrowing base financial
springing minimum fixed cost coverage ratio financial
full valuation allowance financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What revenue and net loss did OESX report for the second quarter of 2026?
How much of OESX's revenue came from one customer?
How much availability did OESX have under its credit facility?
When does OESX's revolving credit facility mature?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
OR
Commission file number
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the act:
Title of Each Class |
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Trading Symbol (s) |
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Name of Each Exchange on Which Registered |
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(NASDAQ Capital Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an "emerging growth company". See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
There were
ORION ENERGY SYSTEMS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2026
TABLE OF CONTENTS
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Page(s) |
PART I FINANCIAL INFORMATION |
3 |
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ITEM 1. |
Financial Statements (unaudited) |
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Condensed Consolidated Balance Sheets as of September 30, 2026 and March 31, 2026 |
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Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2026 and September 30, 2025 |
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Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended September 30, 2026 and September 30, 2025 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2026 and September 30, 2025 |
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Notes to the Condensed Consolidated Financial Statements |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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ITEM 3. |
Quantitative and Qualitative Disclosures about Market Risk |
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ITEM 4. |
Controls and Procedures |
30 |
PART II OTHER INFORMATION |
31 |
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ITEM 1. |
Legal Proceedings |
31 |
ITEM 1A. |
Risk Factors |
31 |
ITEM 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
31 |
ITEM 5. |
Other Information |
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ITEM 6. |
Exhibits |
32 |
SIGNATURE |
33 |
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
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September 30, 2026 |
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March 31, 2026 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Revenue earned but not billed |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders’ Equity |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other |
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Deferred revenue, current |
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Current maturities of long-term debt |
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Total current liabilities |
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Revolving credit facility |
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Long-term debt, less current maturities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies |
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Shareholders’ equity: |
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Preferred stock, $ |
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Common stock, |
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Additional paid-in capital |
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Treasury stock, common shares: |
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( |
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Accumulated deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
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Three Months Ended September 30, |
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Six Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Product revenue |
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$ |
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$ |
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$ |
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$ |
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Service revenue |
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Total revenue |
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Cost of product revenue |
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Cost of service revenue |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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General and administrative |
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Sales and marketing |
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Research and development |
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Total operating expenses |
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Income (loss) from operations |
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( |
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( |
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( |
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Other income (expense): |
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Interest expense |
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( |
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Amortization of debt issue costs |
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( |
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( |
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Royalty income |
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Other |
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( |
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Total other expense |
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( |
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( |
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( |
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( |
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Income (loss) before income tax |
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( |
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( |
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( |
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Income tax (benefit) expense |
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( |
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( |
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Net income (loss) |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Basic net income (loss) per share |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
( |
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Weighted-average common shares outstanding |
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Diluted net income (loss) per share |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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Weighted-average common shares and share |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share amounts)
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Shareholders’ Equity |
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Common Stock Shares |
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Additional |
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Treasury |
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Accumulated |
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Total |
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Balance, March 31, 2026 |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Shares issued under Employee Stock Purchase |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Net income (loss) |
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— |
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— |
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— |
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Balance, June 30, 2026 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Shares issued under Employee Stock Purchase |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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|||
Net income (loss) |
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— |
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— |
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— |
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( |
) |
|
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( |
) |
Balance, September 30, 2026 |
|
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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|||
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|||||
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Shareholders’ Equity |
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Common Stock Shares |
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Additional |
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Treasury |
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Accumulated |
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Total |
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Balance, March 31, 2025 |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Shares issued under Employee Stock Purchase |
|
|
|
|
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— |
|
|
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— |
|
|
|
— |
|
|
|
— |
|
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Stock-based compensation |
|
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|
|
|
|
|
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— |
|
|
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— |
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|
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|||
Net income (loss) |
|
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— |
|
|
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— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, June 30, 2025 |
|
|
|
|
$ |
|
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||
Shares issued under Employee Stock Purchase |
|
|
|
|
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— |
|
|
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— |
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|
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— |
|
|
|
— |
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Issuance of common stock for earnout payment |
|
|
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|
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— |
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|
|
|
|
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— |
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|
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|||
Stock-based compensation |
|
|
|
|
|
|
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— |
|
|
|
— |
|
|
|
|
|||
Net income (loss) |
|
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— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance, September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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|||
|
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|
|
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
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Six Months Ended September 30, |
|
|||||
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2026 |
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2025 |
|
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Operating activities |
|
|
|
|
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Net income (loss) |
|
$ |
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$ |
( |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) |
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Depreciation |
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Amortization of intangible assets |
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Stock-based compensation |
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Amortization of debt issue costs |
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Deferred income tax |
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( |
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Loss on fixed assets |
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Provision for inventory reserves |
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Provision for credit losses |
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Other |
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( |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Revenue earned but not billed |
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( |
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Inventories |
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Prepaid expenses and other assets |
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( |
) |
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Accounts payable |
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( |
) |
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Accrued expenses and other |
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( |
) |
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( |
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Deferred revenue, current and long-term |
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( |
) |
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Net cash provided by (used in) operating activities |
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( |
) |
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Investing activities |
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Purchases of property and equipment |
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( |
) |
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( |
) |
Additions to patents and licenses |
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( |
) |
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Net cash provided by (used in) investing activities |
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( |
) |
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( |
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Financing activities |
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Payment of debt |
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( |
) |
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( |
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Proceeds from debt |
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Proceeds from revolving credit facility |
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Payments of revolving credit facility |
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( |
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( |
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Cash incurred related to issuance of subordinated debt |
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( |
) |
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Net cash provided by (used in) financing activities |
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( |
) |
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Net increase (decrease) in cash and cash equivalents |
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( |
) |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities: |
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Operating lease assets obtained in exchange for new operating lease liabilities |
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$ |
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|
$ |
|
||
Issuance of common stock to Final Frontier, LLC as partial payment of earnout obligation |
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$ |
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|
$ |
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||
Issuance of subordinated debt for earnout obligation |
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$ |
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|
$ |
|
||
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6
ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF BUSINESS
Orion includes Orion Energy Systems, Inc., a Wisconsin corporation, and all consolidated subsidiaries. Orion provides light emitting diode lighting systems, wireless Internet of Things enabled control solutions, project engineering, energy project management design, maintenance services and turnkey electric vehicle charging station installation services to commercial and industrial businesses, and federal and local governments, predominantly in North America.
Orion’s corporate offices and leased primary manufacturing operations are located in Manitowoc, Wisconsin. Orion also leases office space in Jacksonville, Florida and Methuen, Massachusetts. Orion previously leased office space in Lawrence, Massachusetts. The lease in Lawrence, Massachusetts ended in September of 2026.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Orion Energy Systems, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of Orion have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2027 ("fiscal 2027") or other interim periods.
The Condensed Consolidated Balance Sheet as of March 31, 2026 has been derived from the audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete financial statements.
The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in Orion’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026 filed with the SEC on June 4, 2026.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during that reporting period. Areas that require the use of management estimates include revenue recognition, net realizable value of inventory, allowance for credit losses, accruals for warranty, loss contingencies, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from those estimates.
Goodwill and Other Intangible Assets
In the first quarter of fiscal 2027, Orion determined that one of its indefinite-lived trade names no longer had an indefinite life due to changes in revenue earned under the trade name and changes in Orion's strategy for use of the trade name. Orion then
7
performed a quantitative impairment assessment on that indefinite-lived trade name and determined that there was no impairment of that asset. As of June 30, 2026, this trade name was reclassified as definite-lived and is now being amortized over
Concentration of Credit Risk and Other Risks and Uncertainties
Orion's cash is primarily deposited with
Orion purchases components necessary for its lighting products, including lamps and LED components, from multiple suppliers. For the three and six months ended September 30, 2026 and 2025,
For the three months ended September 30, 2026,
As of September 30, 2026,
Recent Accounting Pronouncements
Issued: Not Yet Adopted
In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in Accounting Standards Codification (ASC) 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides "interim financial statements and notes in accordance with GAAP." The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other codification topics, and establishes a principle under which an entity must "disclose events since the end of the last annual reporting period that have a material impact on the entity." As the FASB stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to "change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements." The amendments will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Orion is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which modifies the disclosure and presentation requirements relating to expenses shown on the statements of operations. The amendments in the update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: "1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil and gas-producing activities. 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles in the same disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4. Disclose the total amount of selling expense and, in annual reporting periods, an entity's definition of selling expenses." The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. Orion is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and accompanying notes.
8
NOTE 3 — REVENUE
Orion generates revenues primarily by selling commercial lighting fixtures and components, installing these fixtures in its customer's facilities, and providing maintenance services including repairs and replacements for the lighting and related electrical components deployed in its customer’s facilities. Orion recognizes revenue in accordance with the guidance in ASC 606 when control of the goods or services being provided (which Orion refers to as a performance obligation) is transferred to a customer at an amount that reflects the consideration that management expects to receive in exchange for those goods or services. Prices are generally fixed at the time of order confirmation, either for the contract as a whole or for the hourly rates that will be charged for the type of maintenance services delivered.
If there are multiple performance obligations in a single contract, the contract’s total transaction price is allocated to each individual performance obligation based on their relative standalone selling price. A performance obligation’s standalone selling price is the price at which Orion would sell such promised good or service separately to a customer. Orion uses an observable price to determine the stand-alone selling price for separate performance obligations or an expected cost-plus margin approach when one is not available. When the expected cost-plus margin approach is used to determine the estimated stand-alone selling price it is based on average historical margins for that performance obligation in contracts with similar customers.
Revenue derived from customer contracts which include only performance obligation(s) for the sale of Orion manufactured or sourced lighting fixtures and components is classified as Product revenue in the consolidated statements of operations. The revenue for these transactions is recorded at the point in time when management believes that the customer obtains control of the products, generally either upon shipment or upon delivery to the customer’s facility. This point in time is determined separately for each contract and requires judgment by management of the contract terms and the specific facts and circumstances concerning the transaction.
Revenue from a customer contract, which includes both the sale of Orion manufactured or sourced fixtures and the installation of such fixtures (which Orion refers to as a turnkey project), is allocated between each lighting fixture and the installation performance obligation based on relative standalone selling prices.
The following tables provide detail of Orion’s total revenue for the three and six months ended September 30, 2026 and September 30, 2025 (dollars in thousands):
|
|
Three Months Ended September 30, 2026 |
|
|
Six Months Ended September 30, 2026 |
|
||||||||||||||||||
|
|
Product |
|
|
Services |
|
|
Total |
|
|
Product |
|
|
Services |
|
|
Total |
|
||||||
Revenue from contracts with customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lighting product and installation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Maintenance services |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||
Electric vehicle charging |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended September 30, 2025 |
|
|
Six Months Ended September 30, 2025 |
|
||||||||||||||||||
|
|
Product |
|
|
Services |
|
|
Total |
|
|
Product |
|
|
Services |
|
|
Total |
|
||||||
Revenue from contracts with customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lighting product and installation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Maintenance services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electric vehicle charging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Solar energy related revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenues from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue accounted for under other guidance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
9
From time to time, Orion sells the receivables from one customer to a financing institution. Orion did
The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract liabilities as of September 30, 2026, March 31, 2026 and March 31, 2025 (dollars in thousands):
|
|
September 30, |
|
|
March 31, |
|
|
March 31, |
|
|||
Accounts receivable, net |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Revenue earned but not billed (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Deferred revenue (2) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
(1)
(2)
There were
Orion's performance obligations related to lighting fixtures and EV charging stations typically do not exceed nine months in duration. As a result, Orion has elected the practical expedient that provides an exemption to the disclosure requirements regarding information about value assigned to remaining performance obligations on contracts that have original expected durations of one year or less.
NOTE 4 — ACCOUNTS RECEIVABLE
As of September 30, 2026 and March 31, 2026, Orion's accounts receivable and allowance for credit losses balances were as follows (dollars in thousands):
|
|
September 30, |
|
|
March 31, |
|
||
Accounts receivable, gross |
|
$ |
|
|
$ |
|
||
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
10
Changes in Orion’s allowance for credit losses were as follows (dollars in thousands):
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Credit loss (expense) recovery |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Write-off |
|
|
|
|
|
|
|
|
|
|
|
|
||||
End of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 5 — INVENTORIES
As of September 30, 2026 and March 31, 2026, Orion's inventory balances, net of excess and obsolete reserves of $
|
|
Inventories |
|
|
As of September 30, 2026 |
|
|
|
|
Raw materials and components |
|
$ |
|
|
Work in process |
|
|
|
|
Finished goods |
|
|
|
|
Total |
|
$ |
|
|
|
|
|
|
|
As of March 31, 2026 |
|
|
|
|
Raw materials and components |
|
$ |
|
|
Work in process |
|
|
|
|
Finished goods |
|
|
|
|
Total |
|
$ |
|
|
NOTE 6 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist primarily of prepaid insurance premiums, prepaid subscription fees, prepaid networking services for EV products and Enterprise Resource Planning ("ERP") system implementation fees. Prepaid expenses totaled $
NOTE 7 — PROPERTY AND EQUIPMENT
As of September 30, 2026 and March 31, 2026, property and equipment, net, included the following (dollars in thousands):
|
|
September 30, |
|
|
March 31, |
|
||
Land and land improvements |
|
$ |
|
|
$ |
|
||
Buildings and building improvements |
|
|
|
|
|
|
||
Furniture, fixtures and office equipment |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Plant equipment |
|
|
|
|
|
|
||
Vehicles |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Gross property and equipment |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Total property and equipment, net |
|
$ |
|
|
$ |
|
||
11
NOTE 8 — LEASES
From time to time, Orion leases assets from third parties. Orion also leases certain assets to third parties.
Under ASC 842, both finance and operating lease Right-Of-Use ("ROU") assets and lease liabilities for leases with initial terms in excess of 12 months are recognized at the commencement date based on the present value of lease payments over the lease term. Orion recognizes lease expense for leases with an initial term of 12 months or less, referred to as short term leases, on a straight-line basis over the lease term.
A summary of Orion’s assets leased from third parties follows (dollars in thousands):
|
|
Balance sheet classification |
|
September 30, 2026 |
|
|
March 31, 2026 |
|
||
Assets |
|
|
|
|
|
|
|
|
||
Operating lease assets |
|
Other long-term assets |
|
$ |
|
|
$ |
|
||
Liabilities |
|
|
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
|
|
||
Operating lease liabilities |
|
Accrued expenses and other |
|
$ |
|
|
$ |
|
||
Non-current liabilities |
|
|
|
|
|
|
|
|
||
Operating lease liabilities |
|
Other long-term liabilities |
|
|
|
|
|
|
||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
Orion had operating lease costs of $
The estimated maturity of lease liabilities for each of the remaining years is shown below (dollars in thousands):
Maturity of Lease Liabilities |
|
Operating Leases |
|
|
Fiscal 2027 (period remaining) |
|
$ |
|
|
Fiscal 2028 |
|
|
|
|
Fiscal 2029 |
|
|
|
|
Fiscal 2030 |
|
|
|
|
Total lease payments |
|
$ |
|
|
Less: Interest |
|
|
( |
) |
Present value of lease liabilities |
|
$ |
|
|
Assets Orion Leases to Other Parties
Orion provides long-term financing to one customer who engages Orion in large turnkey projects that span between three and nine months. The customer executes an agreement providing for monthly payments, at a fixed monthly amount, of the contract price, plus interest, over typically a five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation related performance obligations under ASC 606.
While Orion retains ownership of the lighting fixtures during the financing period, the transaction terms and the underlying economics associated with used lighting fixtures result in Orion essentially ceding ownership of the lighting fixtures to the customer after completion of the agreement. Therefore, the portion of the transaction associated with the sale of the multiple individual lighting fixtures is accounted for as a sales-type lease under ASC 842.
Revenues, and production and acquisition costs, associated with sales-type leases are included in Product revenue and Cost of product revenue in the Condensed Consolidated Statements of Operations. These amounts are recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified. The execution of the acknowledgment is considered the commencement date as defined in ASC 842.
12
The following chart shows the amount of revenue and cost of sales arising from sales-type leases during the three and six months ended September 30, 2026 and 2025 (dollars in thousands):
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Product revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of product revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 9 — GOODWILL AND OTHER INTANGIBLE ASSETS
Orion recorded $
Orion recorded $
As of September 30, 2026, and March 31, 2026, the components of, and changes in, the carrying amount of other intangible assets, net, were as follows (dollars in thousands):
|
|
September 30, 2026 |
|
|
March 31, 2026 |
|
||||||||||||||||||||||
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|
Weighted |
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|||||||
Amortized Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Patents |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Licenses |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||||
Trade name and trademarks (1) |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Customer relationships |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||||
Vendor relationships |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Developed technology |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total Amortized Intangible Assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Indefinite-lived Intangible Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Trade name and trademarks |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Total Non-Amortized Intangible Assets |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Other Intangible Assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
(1)
Amortization expense on intangible assets was $
13
The estimated amortization expense for the remainder of fiscal 2027, the next five fiscal years and beyond is shown below (dollars in thousands):
Fiscal 2027 (period remaining) |
|
$ |
|
|
Fiscal 2028 |
|
|
|
|
Fiscal 2029 |
|
|
|
|
Fiscal 2030 |
|
|
|
|
Fiscal 2031 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
NOTE 10 — ACCRUED EXPENSES AND OTHER
As of September 30, 2026, and March 31, 2026, accrued expenses and other included the following (dollars in thousands):
|
|
September 30, |
|
|
March 31, |
|
||
Other accruals |
|
$ |
|
|
$ |
|
||
Compensation and benefits |
|
|
|
|
|
|
||
Credits due to customers |
|
|
|
|
|
|
||
Accrued project costs |
|
|
|
|
|
|
||
Warranty |
|
|
|
|
|
|
||
Sales returns reserve |
|
|
|
|
|
|
||
Sales tax |
|
|
|
|
|
|
||
Legal and professional fees |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Orion generally offers a limited warranty of one to
Changes in Orion’s warranty accrual (both current and long-term) were as follows (dollars in thousands):
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Accruals |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Warranty claims (net of vendor reimbursements) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
End of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
14
NOTE 11 — NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of common shares outstanding for the period and does not consider common stock equivalents.
Diluted net income (loss) per common share reflects the dilution that would occur if restricted shares were vested. In the computation of diluted net income (loss) per common share, Orion uses the treasury stock method for outstanding options and restricted shares. For periods in which the Company reports a net loss, potentially dilutive securities are excluded from the dilution calculation.
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
Basic earnings (loss) per common share: |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) (in thousands) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings (loss) per common share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted earnings (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) (in thousands) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of restricted stock awards and non-qualified stock options |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
Weighted-average common shares and common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted earnings (loss) per common share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
The following table indicates the number of potentially dilutive securities excluded from the calculation of Diluted net income (loss) per common share because their inclusion would have been anti-dilutive. The number of shares is as of the end of each period:
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Time-Based Restricted shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance-Based Restricted shares |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Time-Based Non-Qualified Stock Option |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance-Based Non-Qualified Stock Option |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NOTE 12 — DEBT
Debt, including the revolving credit facility, consisted of the following (dollars in thousands):
|
|
September 30, |
|
|
March 31, |
|
||
Revolving credit facility |
|
$ |
|
|
$ |
|
||
Term loan |
|
|
|
|
|
|
||
Total long-term debt |
|
|
|
|
|
|
||
Less current maturities |
|
|
( |
) |
|
|
( |
) |
Debt, less current maturities |
|
$ |
|
|
$ |
|
||
15
The carrying value of the Company's debt approximates fair value. The estimated fair value of the Company's debt is categorized within Level 2 of the fair value hierarchy because the valuation is based on observable market inputs.
Revolving Credit Facility
On December 29, 2020, Orion entered into a $
Borrowings under the Credit Agreement are permitted in the form of Secured Overnight Financing Rate (“SOFR”), or prime rate-based, loans and generally bear interest at floating rates plus an applicable margin determined by reference to Orion’s availability under the Credit Agreement. Among other fees, Orion is required to pay an annual facility fee and a fee on the unused portion of the Credit Facility.
The Credit Agreement includes a springing minimum fixed cost coverage ratio of
The Credit Agreement also contains customary events of default and other covenants, including certain restrictions on Orion's ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on Orion's stock, redeem, retire, or purchase shares of Orion's stock, make investments or pledge or transfer assets. If an event of default under the Credit Agreement occurs and is continuing, then the lender may cease making advances under the Credit Agreement and declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if Orion becomes the subject of voluntary or involuntary proceedings under any bankruptcy or similar law, then any outstanding obligations under the Credit Agreement will automatically become immediately due and payable.
The Credit Agreement is secured by a first lien security interest in substantially all of Orion's assets.
Effective May 29, 2026, Orion, with Bank of America as lender, executed Amendment No. 5 ("Amendment No. 5") to its Credit Agreement. The primary purpose of Amendment No. 5 was to extend the maturity date of the Credit Facility from June 30, 2027 to
In addition to the Credit Facility, the Credit Agreement also includes a $
As of September 30, 2026, Orion was in compliance with all debt covenants under the Credit Agreement.
NOTE 13 — INCOME TAXES
Orion’s income tax provision was determined by applying an estimated annual effective tax rate, based upon the facts and circumstances known, to book income or loss before income tax, adjusting for discrete items. Orion’s actual effective tax rate is adjusted each interim period, as appropriate, for changes in facts and circumstances. For the three months ended September 30, 2026 and 2025, Orion recorded income tax expense/(benefit) of $(
16
As of September 30, 2026 and March 31, 2026, Orion had a full valuation allowance against its net deferred tax asset balance. Orion considers future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. In the event that Orion determines that the deferred tax assets are able to be realized, an adjustment to the deferred tax asset would increase income in the period such determination is made.
In the first quarter of fiscal 2027, Orion determined that one of its indefinite-lived trade names no longer had an indefinite life. As such, the corresponding deferred tax liability was reduced in the period. This resulted in a $
Uncertain Tax Positions
As of September 30, 2026, Orion’s balance of gross unrecognized tax benefits was approximately $
Orion has classified the amounts recorded for uncertain tax benefits in the Condensed Consolidated Balance Sheets as Other long-term liabilities to the extent that payment is not anticipated within one year.
NOTE 14 — COMMITMENTS AND CONTINGENCIES
Litigation
NOTE 15 — SHAREHOLDERS’ EQUITY
Employee Stock Purchase Plan
In August 2010, Orion’s board of directors approved a non-compensatory employee stock purchase plan, or “ESPP”. In the three months ended September 30, 2026, Orion issued
Sale of Shares
In March 2026, Orion filed a shelf registration statement with the Securities and Exchange Commission. Under the shelf registration statement, Orion currently has the flexibility to publicly offer and sell from time to time up to $
NOTE 16 — STOCK OPTIONS AND RESTRICTED SHARES
At Orion’s 2026 annual meeting of shareholders, Orion’s shareholders approved the amendment and restatement of the Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, (the “Amended 2016 Plan”). The Amended 2016 Plan increased the number of shares of Orion’s common stock available for issuance under the Amended 2016 Plan from
17
The Amended 2016 Plan authorizes grants of equity-based and incentive cash awards to eligible participants designated by the Plan's administrator. Awards under the Amended 2016 Plan may consist of stock options, stock appreciation rights, performance shares, performance units, common stock, restricted stock, restricted stock units, incentive awards or dividend equivalent units.
The Amended 2016 Plan also permits accelerated vesting in the event of certain changes of control of Orion as well as under other special circumstances. Certain non-employee directors have from time to time elected to receive stock awards in lieu of cash compensation pursuant to elections made under Orion’s non-employee director compensation program.
The following amounts of Orion's consolidated stock-based compensation were recorded (dollars in thousands):
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Cost of product revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table summarizes information with respect to performance-vesting restricted stock and time-vesting restricted stock activity:
|
|
Time-Based |
|
|
Performance-Based |
|
||||||||||
|
|
Shares |
|
|
Weighted |
|
|
Shares |
|
|
Weighted |
|
||||
Balance at March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Shares issued |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Shares vested |
|
|
( |
) |
|
$ |
|
|
|
|
|
$ |
|
|||
Shares forfeited |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Shares outstanding at September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The following table summarizes information with respect to performance-based option and time-based option activity:
|
|
Time-Based |
|
|
Performance-Based |
|
||||||||||
|
|
Options |
|
|
Weighted |
|
|
Options |
|
|
Weighted |
|
||||
Balance at March 31, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options granted |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options outstanding at September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
As of September 30, 2026, the amount of deferred stock-based compensation expense to be recognized, over a remaining period of
NOTE 17 — SEGMENT DATA
Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker ("CODM") regularly reviews when allocating resources and assessing performance. Orion's CODM is the chief executive officer. Orion's CODM focuses primarily on each segment's ability to generate sufficient revenues and manage cost of services along with operating expenses. As such, the CODM measures operating performance at the segment level based on operating
18
income or loss, including evaluation of budget to actual variances. Orion evaluates and reports on the business using
Lighting Segment
The lighting segment develops and sells lighting products and provides construction and engineering services for Orion's commercial lighting and energy management systems. The lighting segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers mostly through direct sales and also sells lighting products through manufacturer representative agencies and to the wholesale contractor markets through energy service companies and contractors.
Maintenance Segment
The maintenance segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.
EV Segment
The EV segment offers leading electric vehicle charging expertise, sells and installs sourced electric vehicle charging stations with related software subscriptions and renewals and provides EV turnkey installation solutions with ongoing support to all commercial verticals.
Corporate and Other
Corporate and other is comprised of operating expenses not allocated to Orion’s segments and adjustments to reconcile to consolidated results.
Three Months Ended September 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||
|
Lighting |
|
Maintenance |
|
EV |
|
Corporate and Other |
|
Total |
|
|||||
Product revenue |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||
Service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of product revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from operations |
|
|
|
|
|
|
|
( |
) |
|
( |
) |
|||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|||||
Royalty income |
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Amortization of debt issue cost |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other |
|
|
|
|
|
|
|
|
|
|
|||||
Total other expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income (loss) before income tax |
|
|
|
|
|
|
|
|
$ |
( |
) |
||||
19
Three Months Ended September 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||
|
Lighting |
|
Maintenance |
|
EV |
|
Corporate and Other |
|
Total |
|
|||||
Product revenue |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||
Service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of product revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from operations |
|
( |
) |
|
|
|
|
|
( |
) |
|
( |
) |
||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|||||
Royalty income |
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Amortization of debt issue cost |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Total other expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income (loss) before income tax |
|
|
|
|
|
|
|
|
$ |
( |
) |
||||
Six Months Ended September 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||
|
Lighting |
|
Maintenance |
|
EV |
|
Corporate and Other |
|
Total |
|
|||||
Product revenue |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||
Service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of product revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from operations |
|
|
|
|
|
|
|
( |
) |
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|||||
Royalty income |
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Amortization of debt issue cost |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Total other expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income (loss) before income tax |
|
|
|
|
|
|
|
|
$ |
|
|||||
20
Six Months Ended September 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|||||
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|||||
|
Lighting |
|
Maintenance |
|
EV |
|
Corporate and Other |
|
Total |
|
|||||
Product revenue |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||
Service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of product revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Cost of service revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Total cost of revenue |
|
|
|
|
|
|
|
|
|
|
|||||
Gross profit |
|
|
|
|
|
|
|
|
|
|
|||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|||||
Income (loss) from operations |
|
( |
) |
|
|
|
|
|
( |
) |
|
( |
) |
||
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|||||
Royalty income |
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Amortization of debt issue cost |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Total other expense |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income (loss) before income tax |
|
|
|
|
|
|
|
|
$ |
( |
) |
||||
|
|
Depreciation and Amortization |
Capital Expenditures |
|
||||||||||||
|
|
Six Months Ended September 30, |
Six Months Ended September 30, |
|
||||||||||||
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Segments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lighting Segment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Maintenance Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EV Segment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Total Assets |
|
|||||
(dollars in thousands) |
|
September 30, 2026 |
|
|
March 31, 2026 |
|
||
Segments: |
|
|
|
|
|
|
||
Lighting Segment |
|
$ |
|
|
$ |
|
||
Maintenance Segment |
|
|
|
|
|
|
||
EV Segment |
|
|
|
|
|
|
||
Corporate and Other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited Condensed Consolidated Financial Statements and related notes included in this Form 10-Q, as well as our audited Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Cautionary Note Regarding Forward-Looking Statements
Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to several risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to, those discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.
Overview
We provide state-of-the-art light emitting diode (“LED”) lighting systems, wireless Internet of Things (“IoT”) enabled control solutions, project engineering, energy project management design and maintenance services and electric vehicle (“EV”) charging infrastructure solutions. We help our customers achieve their sustainability, energy savings and carbon footprint reduction goals through innovative technology and exceptional service. We research, design, develop, manufacture, market, sell, install, and implement energy management systems consisting primarily of high-performance, energy-efficient commercial and industrial interior and exterior LED lighting systems and related services. Our products are targeted for applications in the following segments: commercial office and retail, data centers, area lighting, roadway and industrial applications and government, although we do sell and install products into other markets. Our services consist of turnkey installation and system maintenance. Virtually all of our sales occur within North America or for the US Department of Defense's military bases operating in foreign countries.
Our lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems. Our principal lighting customers include large national account end-users, federal and state government facilities, large regional account end-users, electrical distributors, electrical contractors and energy service companies (“ESCOs”). Currently, most of our interior lighting products are manufactured at our leased production facility located in Manitowoc, Wisconsin, although as the LED and related IoT market continues to evolve, we are increasingly sourcing products and components from third parties in order to provide versatility in our product development and offerings.
We differentiate ourselves from our competitors by offering comprehensive project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration. In addition, we offer lighting and electrical maintenance services, which enables us to support a lifetime business relationship with our customer (which we call “Customers for Life”). We completed the acquisition of Voltrek LLC on October 5, 2022, which further expanded our turnkey services capabilities as well as capitalized on the rapidly growing market for EV charging solutions. We completed the Stay-Lite Lighting acquisition on January 1, 2022, which further expanded our maintenance services capabilities.
22
We believe the market for LED lighting products and related controls continues to grow. Due to their size and flexibility in application, we also believe that our LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other lighting technologies. Our LED lighting technologies have become the primary component of our revenue as we continue to strive to be a leader in the LED market.
We see opportunity to cross-sell our three platforms of lighting, maintenance services and EV charging installation systems to our commercial and industrial customer base. We are pursuing opportunities to cross-sell to direct customers, as well as through select partners. We also see opportunity for further integration of our service capabilities to expand our geographic reach and we currently intend to pursue growth organically.
Other than our multi-year maintenance service contracts, we generally do not have long-term contracts with our customers for product or turnkey services that provide us with recurring annual revenue. We typically generate substantially all of our revenue from sales of lighting and control systems and related services to governmental, commercial and industrial customers on a project-by-project basis. We also perform work under master services or product purchasing agreements with major customers with sales completed on a purchase order basis. In addition, in order to provide quality and timely service under our multi-location master retrofit agreements, we make substantial working capital expenditures and advance inventory purchases that we intend to recover through the completion of these or similar projects.
We typically sell our lighting systems in replacement of our customers’ existing fixtures. We call this replacement process a "retrofit". We frequently engage our customer’s existing electrical contractor to provide installation and project management services. We also sell our lighting systems on a wholesale basis, principally to electrical distributors and ESCOs to sell to their own customer bases.
The gross margins of our products can vary significantly depending upon the types of products we sell, with margins typically ranging from 10% to 50%. As a result, a change in the total mix of our sales among higher or lower margin products can cause our profitability to fluctuate from period to period.
Our fiscal year ends on March 31. We refer to our current fiscal year, which ends on March 31, 2027, as "fiscal 2027", our most recently completed fiscal year, which ended on March 31, 2026, as "fiscal 2026", and our prior fiscal year which ended on March 31, 2025, as "fiscal 2025". Our fiscal first quarter of each fiscal year ends on June 30, our fiscal second quarter of each fiscal year ends on September 30, our fiscal third quarter of each fiscal year ends on December 31 and our fiscal fourth quarter of each fiscal year ends on March 31.
23
Results of Operations - Three Months Ended September 30, 2026 versus Three Months Ended September 30, 2025
The following table sets forth the line items of our Condensed Consolidated Statements of Operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (dollars in thousands, except percentages):
|
|
Three Months Ended September 30, |
|
|||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
2026 |
|
|
2025 |
|
|||||
|
|
Amount |
|
|
Amount |
|
|
% |
|
|
% of |
|
|
% of |
|
|||||
Product revenue |
|
$ |
13,410 |
|
|
$ |
12,813 |
|
|
|
4.7 |
% |
|
|
61.8 |
% |
|
|
64.3 |
% |
Service revenue |
|
|
8,281 |
|
|
|
7,106 |
|
|
|
16.5 |
% |
|
|
38.2 |
% |
|
|
35.7 |
% |
Total revenue |
|
|
21,691 |
|
|
|
19,919 |
|
|
|
8.9 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of product revenue |
|
|
8,732 |
|
|
|
8,777 |
|
|
|
(0.5 |
)% |
|
|
40.3 |
% |
|
|
44.1 |
% |
Cost of service revenue |
|
|
6,738 |
|
|
|
4,965 |
|
|
|
35.7 |
% |
|
|
31.1 |
% |
|
|
24.9 |
% |
Total cost of revenue |
|
|
15,470 |
|
|
|
13,742 |
|
|
|
12.6 |
% |
|
|
71.3 |
% |
|
|
69.0 |
% |
Gross profit |
|
|
6,221 |
|
|
|
6,177 |
|
|
|
0.7 |
% |
|
|
28.7 |
% |
|
|
31.0 |
% |
General and administrative |
|
|
3,943 |
|
|
|
3,812 |
|
|
|
3.4 |
% |
|
|
18.2 |
% |
|
|
19.1 |
% |
Sales and marketing |
|
|
2,757 |
|
|
|
2,376 |
|
|
|
16.0 |
% |
|
|
12.7 |
% |
|
|
11.9 |
% |
Research and development |
|
|
255 |
|
|
|
231 |
|
|
|
10.4 |
% |
|
|
1.2 |
% |
|
|
1.2 |
% |
Income (loss) from operations |
|
|
(734 |
) |
|
|
(242 |
) |
|
|
(203.3 |
)% |
|
|
(3.4 |
)% |
|
|
(1.2 |
)% |
Interest expense |
|
|
(128 |
) |
|
|
(280 |
) |
|
|
(54.3 |
)% |
|
|
(0.6 |
)% |
|
|
(1.4 |
)% |
Amortization of debt issue costs |
|
|
(19 |
) |
|
|
(50 |
) |
|
|
(62.0 |
)% |
|
|
(0.1 |
)% |
|
|
(0.3 |
)% |
Royalty income |
|
|
4 |
|
|
|
1 |
|
|
|
300.0 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Other |
|
|
35 |
|
|
|
— |
|
|
NM |
|
|
|
0.2 |
% |
|
|
0.0 |
% |
|
Income (loss) before income tax |
|
|
(842 |
) |
|
|
(571 |
) |
|
|
(47.5 |
)% |
|
|
(3.9 |
)% |
|
|
(2.9 |
)% |
Income tax expense (benefit) |
|
|
(31 |
) |
|
|
10 |
|
|
|
(410.0 |
)% |
|
|
(0.1 |
)% |
|
|
0.1 |
% |
Net income (loss) |
|
$ |
(811 |
) |
|
$ |
(581 |
) |
|
|
(39.6 |
)% |
|
|
(3.7 |
)% |
|
|
(2.9 |
)% |
NM - Not Material
Revenue, Cost of Revenue and Gross Margin. Product revenue increased 4.7%, or $0.6 million, for the second quarter of fiscal 2027 versus the second quarter of fiscal 2026. Service revenue increased 16.5%, or $1.2 million, for the second quarter of fiscal 2027 versus the second quarter of fiscal 2026. The resulting increase in total revenue was due to an increase in revenue in the lighting segment partially offset by decreases in revenue in the maintenance and EV segments. Cost of product revenue decreased by 0.5%, or $45 thousand, in the second quarter of fiscal 2027 versus the comparable period in fiscal 2026. Cost of service revenue increased by 35.7%, or $1.8 million, in the second quarter of fiscal 2027 versus the comparable period in fiscal 2026, primarily driven by the increased service revenue. Gross margin decreased from 31.0% of revenue in the second quarter of fiscal 2026 to 28.7% of revenue in the second quarter of fiscal 2027, due primarily to decreases in the maintenance and EV segments, partially offset by an increase in the lighting segment.
Operating Expenses
General and Administrative. General and administrative expenses increased 3.4%, or $0.1 million, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026.
Sales and Marketing. Sales and marketing expenses increased 16.0%, or $0.4 million, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026. This comparative increase was primarily due to increased commissions expense.
Research and Development. Research and development expenses increased 10.4%, or $24 thousand, in the second quarter of fiscal 2027 compared to the second quarter of fiscal 2026.
24
Lighting Segment
Our lighting segment develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems. Our lighting segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers mostly through direct sales and also sells lighting products through manufacturer representative agencies and to the wholesale contractor markets through ESCOs and contractors.
The following table summarizes our lighting segment operating results (dollars in thousands):
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|||
Revenue |
|
$ |
14,904 |
|
|
$ |
10,664 |
|
|
|
39.8 |
% |
Operating income (loss) |
|
$ |
57 |
|
|
$ |
(853 |
) |
|
|
106.7 |
% |
Operating margin |
|
|
0.4 |
% |
|
|
(8.0 |
)% |
|
|
|
|
Lighting segment revenue in the second quarter of fiscal 2027 increased by 39.8%, or $4.2 million, compared to the second quarter of fiscal 2026. The increase was primarily related to additional turnkey projects. The change from operating loss to operating income is primarily due to the increased revenue.
Maintenance Segment
Our maintenance segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.
The following table summarizes our maintenance segment operating results (dollars in thousands):
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|||
Revenue |
|
$ |
3,967 |
|
|
$ |
4,491 |
|
|
|
(11.7 |
)% |
Operating income (loss) |
|
$ |
305 |
|
|
$ |
554 |
|
|
|
(44.9 |
)% |
Operating margin |
|
|
7.7 |
% |
|
|
12.3 |
% |
|
|
|
|
Maintenance segment revenue in the second quarter of fiscal 2027 decreased by 11.7%, or $0.5 million, compared to the second quarter of fiscal 2026 primarily due to decreased work orders from a major customer. Operating income in this segment decreased as a result of decreased revenue.
EV Segment
Our EV segment offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals.
The following table summarizes our EV segment operating results (dollars in thousands):
|
|
Three Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|||
Revenue |
|
$ |
2,820 |
|
|
$ |
4,764 |
|
|
|
(40.8 |
)% |
Operating income (loss) |
|
$ |
76 |
|
|
$ |
1,059 |
|
|
|
(92.8 |
)% |
Operating margin |
|
|
2.7 |
% |
|
|
22.2 |
% |
|
|
|
|
25
EV segment revenue in the second quarter of fiscal 2027 decreased by 40.8%, or $1.9 million, compared to the second quarter of fiscal 2026. The decrease in revenue was primarily due to a decrease in turnkey projects. Operating income decreased $1.0 million as a result of decreased revenue.
Results of Operations - Six Months Ended September 30, 2026 versus Six Months Ended September 30, 2025
The following table sets forth the line items of our Condensed Consolidated Statements of Operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (dollars in thousands, except percentages):
|
|
Six Months Ended September 30, |
|
|||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
|
|
|
2026 |
|
|
2025 |
|
|||||
|
|
Amount |
|
|
Amount |
|
|
% |
|
|
% of |
|
|
% of |
|
|||||
Product revenue |
|
$ |
27,629 |
|
|
$ |
26,325 |
|
|
|
5.0 |
% |
|
|
58.2 |
% |
|
|
66.7 |
% |
Service revenue |
|
|
19,805 |
|
|
|
13,169 |
|
|
|
50.4 |
% |
|
|
41.8 |
% |
|
|
33.3 |
% |
Total revenue |
|
|
47,434 |
|
|
|
39,494 |
|
|
|
20.1 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of product revenue |
|
|
17,400 |
|
|
|
17,599 |
|
|
|
(1.1 |
)% |
|
|
36.7 |
% |
|
|
44.6 |
% |
Cost of service revenue |
|
|
14,902 |
|
|
|
9,817 |
|
|
|
51.8 |
% |
|
|
31.4 |
% |
|
|
24.9 |
% |
Total cost of revenue |
|
|
32,302 |
|
|
|
27,416 |
|
|
|
17.8 |
% |
|
|
68.1 |
% |
|
|
69.4 |
% |
Gross profit |
|
|
15,132 |
|
|
|
12,078 |
|
|
|
25.3 |
% |
|
|
31.9 |
% |
|
|
30.6 |
% |
General and administrative |
|
|
7,636 |
|
|
|
8,102 |
|
|
|
(5.8 |
)% |
|
|
16.1 |
% |
|
|
20.5 |
% |
Sales and marketing |
|
|
5,595 |
|
|
|
4,792 |
|
|
|
16.8 |
% |
|
|
11.8 |
% |
|
|
12.1 |
% |
Research and development |
|
|
523 |
|
|
|
439 |
|
|
|
19.1 |
% |
|
|
1.1 |
% |
|
|
1.1 |
% |
Income (loss) from operations |
|
|
1,378 |
|
|
|
(1,255 |
) |
|
|
(209.8 |
)% |
|
|
2.9 |
% |
|
|
(3.2 |
)% |
Interest expense |
|
|
(226 |
) |
|
|
(449 |
) |
|
|
(49.7 |
)% |
|
|
(0.5 |
)% |
|
|
(1.1 |
)% |
Amortization of debt issue costs |
|
|
(37 |
) |
|
|
(101 |
) |
|
|
(63.4 |
)% |
|
|
(0.1 |
)% |
|
|
(0.3 |
)% |
Royalty income |
|
|
5 |
|
|
|
3 |
|
|
|
66.7 |
% |
|
|
0.0 |
% |
|
|
0.0 |
% |
Income (loss) before income tax |
|
|
1,113 |
|
|
|
(1,802 |
) |
|
|
(161.8 |
)% |
|
|
2.3 |
% |
|
|
(4.6 |
)% |
Income tax expense (benefit) |
|
|
(36 |
) |
|
|
23 |
|
|
|
(256.5 |
)% |
|
|
(0.1 |
)% |
|
|
0.1 |
% |
Net income (loss) |
|
$ |
1,149 |
|
|
$ |
(1,825 |
) |
|
|
(163.0 |
)% |
|
|
2.4 |
% |
|
|
(4.6 |
)% |
Revenue, Cost of Revenue and Gross Margin. Product revenue increased 5.0%, or $1.3 million, for the first six months of fiscal 2027 versus the first six months of fiscal 2026. Service revenue increased 50.4%, or $6.6 million, for the first six months of fiscal 2027 versus the first six months of fiscal 2026. The resulting increase in total revenue was due to an increase in revenue in the lighting segment, partially offset by decreases in revenue in the maintenance and EV segments. Cost of product revenue decreased by 1.1%, or $0.2 million, in the first six months of fiscal 2027 versus the comparable period in fiscal 2026. Cost of service revenue increased by 51.8%, or $5.1 million, in the first six months of fiscal 2027 versus the comparable period in fiscal 2026, primarily due to the increase in service revenue compared to fiscal 2026. Gross margin increased from 30.6% of revenue in the first six months of fiscal 2026 to 31.9% of revenue in the first six months of fiscal 2027, due primarily to increased margins in the lighting and maintenance segments.
Operating Expenses
General and Administrative. General and administrative expenses decreased 5.8%, or $0.5 million, in the first six months of fiscal 2027 compared to the first six months of fiscal 2026. This comparative decrease was primarily due to lower compensation expenses along with a significant decrease in legal and shareholder relations expenses, primarily due to legal and shareholder relations expenses related to the reverse stock split in the first six months of fiscal 2026 that did not recur in the first six months of fiscal 2027. These decreases in fiscal 2027 were partially offset by increases in software and hardware expenses along with consulting expenses.
Sales and Marketing. Sales and marketing expenses increased 16.8%, or $0.8 million, in the first six months of fiscal 2027 compared to the first six months of fiscal 2026. This comparative increase was primarily due to increased commissions expense.
26
Research and Development. Research and development expenses increased 19.1%, or $0.1 million, in the first six months of fiscal 2027 compared to the first six months of fiscal 2026.
Lighting Segment
Our lighting segment develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems. Our lighting segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers mostly through direct sales and also sells lighting products though manufacturer representative agencies and to the wholesale contractor markets through ESCOs and contractors.
The following table summarizes our lighting segment operating results (dollars in thousands):
|
|
Six Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|||
Revenue |
|
$ |
32,571 |
|
|
$ |
23,546 |
|
|
|
38.3 |
% |
Operating income (loss) |
|
$ |
2,635 |
|
|
$ |
(618 |
) |
|
|
526.4 |
% |
Operating margin |
|
|
8.1 |
% |
|
|
(2.6 |
)% |
|
|
|
|
Lighting segment revenue in the first six months of fiscal 2027 increased by 38.3%, or $9.0 million, compared to the first six months of fiscal 2026. The increase in revenue was primarily due to increased projects for a major customer. The increase in operating income in this segment was primarily due to increased revenue.
Maintenance Segment
Our maintenance segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.
The following table summarizes our maintenance segment operating results (dollars in thousands):
|
|
Six Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|||
Revenue |
|
$ |
8,063 |
|
|
$ |
8,488 |
|
|
|
(5.0 |
)% |
Operating income (loss) |
|
$ |
752 |
|
|
$ |
683 |
|
|
|
10.1 |
% |
Operating margin |
|
|
9.3 |
% |
|
|
8.0 |
% |
|
|
|
|
Maintenance segment revenue in the first six months of fiscal 2027 decreased by 5.0%, or $0.4 million, compared to the first six months of fiscal 2026 primarily due to decreased work orders from a major customer. Operating income in this segment increased as a result of increased margins and strong financial discipline.
EV Segment
Our EV segment offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals.
The following table summarizes our EV segment operating results (dollars in thousands):
|
|
Six Months Ended September 30, |
|
|||||||||
|
|
2026 |
|
|
2025 |
|
|
% |
|
|||
Revenue |
|
$ |
6,800 |
|
|
$ |
7,460 |
|
|
|
(8.8 |
)% |
Operating income (loss) |
|
$ |
218 |
|
|
$ |
737 |
|
|
|
(70.4 |
)% |
Operating margin |
|
|
3.2 |
% |
|
|
9.9 |
% |
|
|
|
|
27
EV segment revenue in the first six months of fiscal 2027 decreased by 8.8%, or $0.7 million, compared to the first six months of fiscal 2026. The decrease in revenue was primarily due to a decrease in turnkey projects. Operating income in this segment decreased due to lower revenue along with lower margins compared to fiscal 2026.
Liquidity and Capital Resources
Overview
We believe our existing cash and operating cash flow provide us with the financial flexibility needed to meet our capital requirements, including to fund our budgeted capital expenditures and working capital needs for at least one year from the date of this report, as well as our longer-term capital requirements for periods beyond at least one year from the date of this report.
We had approximately $3.7 million in cash and cash equivalents as of September 30, 2026, compared to $3.3 million at March 31, 2026. Our cash position increased primarily as a result of our financing activities which saw an increase in our Credit Facility. The cash provided by financing was partially offset by a used in position in operating activities, which was primarily driven by decreases in accounts payable and accrued expenses, partially offset by decreases in accounts receivable and revenue earned but not billed.
Our future liquidity needs and forecasted cash flows are dependent upon many factors, including our relative revenue, gross margins, cash management practices, cost containment, and working capital management and capital expenditures. While we believe that we will likely have adequate available cash and equivalents and credit availability under our Credit Agreement to satisfy our currently anticipated working capital and liquidity requirements for at least the next 12 months based on our current cash flow forecast, if we experience significant liquidity constraints, we may be required to issue equity or debt securities, reduce our sales efforts, implement additional cost savings initiatives or undertake other efforts to conserve our cash.
Cash Flows
The following table summarizes our cash flows for the six months ended September 30, 2026 and 2025 (in thousands):
|
|
Six Months Ended September 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Operating activities |
|
$ |
(2,033 |
) |
|
$ |
1,304 |
|
Investing activities |
|
|
(50 |
) |
|
|
(312 |
) |
Financing activities |
|
|
2,554 |
|
|
|
(1,809 |
) |
(Increase) decrease in cash and cash equivalents |
|
$ |
471 |
|
|
$ |
(817 |
) |
Cash Flows Related to Operating Activities. Cash used in operating activities for the first six months of fiscal 2027 was $2.0 million and consisted of our net income of $1.2 million adjusted for non-cash expense items and net cash used in changes in operating assets of $3.2 million, the largest of which was a decrease in accounts payable, partially offset by decrease in accounts receivable and revenue earned but not billed.
Cash provided by operating activities for the first six months of fiscal 2026 was $1.3 million and consisted of our net loss of $1.8 million adjusted for non-cash expense items and net cash provided in changes in operating assets of $3.1 million, the largest of which were increases in accounts receivable, net, prepaid expenses and other current assets, and inventories, net, partially offset by a decrease in accrued expenses and other.
Cash Flows Related to Investing Activities. Cash used in investing activities was $0.1 million in the first six months of fiscal 2027 and consisted primarily of purchases of property and equipment.
Cash used in investing activities of $0.3 million in the first six months of fiscal 2026 consisted primarily of purchases of property and equipment, mostly related to our ERP system implementation.
Cash Flows Related to Financing Activities. Cash provided by financing activities of $2.6 million in the first six months of fiscal 2027 was primarily due to additional proceeds from our mortgage term loan along with proceeds from our Credit Facility.
28
Cash used in financing activities of $1.8 million in the first six months of fiscal 2026 was primarily due to payments on our revolving credit facility and long-term debt, along with costs incurred related to the issuance of subordinated debt.
Working Capital
Our net working capital as of September 30, 2026 was $15.4 million, consisting of $35.9 million in current assets and $20.6 million in current liabilities. Our net working capital as of March 31, 2026 was $11.0 million, consisting of $37.7 million in current assets and $26.7 million in current liabilities.
We generally attempt to maintain at least a three-month supply of on-hand inventory of purchased components and raw materials to meet anticipated demand, as well as to reduce our risk of unexpected raw material or component shortages or supply interruptions. Our accounts receivable, net, inventories, net, accounts payable and revenue earned but not billed may increase to the extent our revenue and order levels increase.
Indebtedness
Revolving Credit Agreement
Our Credit Agreement provides for a $25.0 million revolving credit facility (the “Credit Facility”) that matures on June 30, 2030. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash. As of September 30, 2026, the borrowing base supported approximately $17.5 million of availability under the Credit Facility, with $5.0 million drawn against that availability. As of September 30, 2025, the borrowing base supported approximately $14.1 million of availability under the Credit Facility, with $5.8 million drawn against that availability.
The Credit Agreement is secured by a first lien security interest in substantially all of our assets.
Borrowings under the Credit Agreement are permitted in the form of SOFR or prime rate-based loans and generally bear interest at floating rates plus an applicable margin determined by reference to our availability under the Credit Agreement. Among other fees, we are required to pay an annual facility fee of $15,000 and a fee of 25 basis points on the unused portion of the Credit Facility.
The Credit Agreement includes a springing minimum fixed cost coverage ratio of 1.0 to 1.0 when excess availability under the Credit Facility falls below $4.0 million of the committed facility. Currently, the springing minimum fixed cost coverage ratio is not required.
Backlog
Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed purchase orders. Backlog totaled $20.8 million and $30.1 million as of September 30, 2026 and March 31, 2026, respectively. We generally expect our backlog to be recognized as revenue within one year. Backlog does not include any amounts for contracted maintenance services.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates since March 31, 2026. For a full discussion of these estimates and policies, see "Critical Accounting Estimates" within "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026.
Recent Accounting Pronouncements
For a complete discussion of recent accounting pronouncements, refer to Note 2 in the Condensed Consolidated Financial Statements included elsewhere in this report.
29
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk was discussed in the “Quantitative and Qualitative Disclosures About Market Risk” section contained in our Annual Report on Form 10-K for the year ended March 31, 2026. There have been no material changes to such exposures since March 31, 2026.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of September 30, 2026, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on this evaluation, such officers concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
During the quarter ended September 30, 2026, we launched and adopted a new Enterprise Resource Planning ("ERP") system, which replaced our existing ERP systems. The new ERP system is expected to enhance efficiency and simplify our accounting and reporting processes. In conjunction with the implementation of the ERP system, our internal processes, procedures, and controls have been updated as needed.
Except as discussed in the preceding paragraph, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
30
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to various claims and legal proceedings arising in the ordinary course of business. As of the date of this report, we do not believe that the final resolution of any of such claims or legal proceedings will have a material adverse effect on our future results of operations.
ITEM 1A. RISK FACTORS
We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I - Item 1A under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, which we filed with the SEC on June 4, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
During the three months ended September 30, 2026, none of our directors or officers
31
ITEM 6. EXHIBITS
31.1 |
Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.+ |
|
|
31.2 |
Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.+ |
|
|
32.1 |
Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+ |
|
|
32.2 |
Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+ |
|
|
10.1 |
Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, as amended and restated (incorporated by reference to Annex A to the Company's definitive proxy statement filed with the Securities and Exchange Commission on Schedule 14Q on June 23, 2026).* |
|
|
101.INS |
Inline XBRL Instance Document+ |
|
|
101.SCH |
Inline XBRL Taxonomy extension schema document+ |
|
|
101.CAL |
Inline XBRL Taxonomy extension calculation linkbase document+ |
|
|
101.DEF |
Inline XBRL Taxonomy extension definition linkbase document+ |
|
|
101.LAB |
Inline XBRL Taxonomy extension label linkbase document+ |
|
|
101.PRE |
Inline XBRL Taxonomy extension presentation linkbase document+ |
|
|
104 |
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, has been formatted in Inline XBRL and is contained in Exhibit 101. |
* Management contract or compensatory plan or arrangement
+ Filed herewith
32
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 5, 2026.
ORION ENERGY SYSTEMS, INC. |
||
|
|
|
By |
|
/s/ J. Per Brodin |
|
|
J. Per Brodin |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer and Authorized Signatory) |
33